YJSB and Commissioner of Taxation (Taxation)

[2023] AATA 3142

YJSB and Commissioner of Taxation (Taxation) [2023] AATA 3142 (5 October 2023)

Division: SMALL BUSINESS TAXATION DIVISION

File Number(s):      2023/4963

Re:YJSB

APPLICANT

AndCommissioner of Taxation

RESPONDENT

DECISION

Tribunal:Deputy President Bernard J. McCabe

Date:5 October 2023

Place:Sydney

The proceedings are dismissed pursuant to s 42B of the Administrative Appeals Tribunal Act 1975 (Cth).

...........................[SGD]........................

Deputy President Bernard J. McCabe

Catchwords

PRACTICE AND PROCEDURE – Taxation - application for dismissal of application for review – where applicant has been deregistered as a company - consideration of the impact of deregistration

Legislation

Administrative Appeals Tribunal Act 1975 (Cth) - ss 30(1A), 42A(2) or 5 & 42B
Taxation Administration Act 1953 (Cth) - ss14ZZ, 14ZZD
Corporations Act 2001 (Cth) - s 601AD

Cases

MedAid Pty Ltd and Commissioner of Taxation [2017] AATA 2293 (MedAid No 1)

MedAid Pty Ltd and Commissioner of Taxation [2018] AATA 170 (MedAid No 2)

REASONS FOR DECISION

Deputy President Bernard J. McCabe

5 October 2023

1. The applicant company, YJSB, commenced these proceeding on 8 July 2023. On 23 July 2023, the applicant was deregistered by the Australian Securities and Investments Commission (ASIC). The deregistration process had been initiated on 15 December 2022. I understand the deregistration was delayed while ASIC consulted the Commissioner of Taxation, but that interaction did not ultimately change the outcome for present purposes: the applicant company was deregistered.

2. The Commissioner says the proceedings should be dismissed – most obviously under s 42B of the Administrative Appeals Tribunal Act 1975 (Cth) (the AAT Act) or under sub-section 42A(2) or (5). An interlocutory hearing was listed to discuss the way forward.

3. The applicant’s former director engaged Mr Murray, a solicitor, who contacted the Tribunal and the Commissioner about the review. Mr Murray was given leave to participate in the interlocutory hearing. He provided a letter which set out his submissions. He said he did not presently hold instructions from the former director to apply to the Court to reinstate the applicant company. The Commissioner also provided written submissions.

4. As I explained in MedAid Pty Ltd and Commissioner of Taxation [2017] AATA 2293 (MedAid No 1), deregistration is the corporate equivalent of death. The entity ceases to exist upon deregistration: see s 601AD of the Corporations Act 2001 (Cth). That means the defunct entity is unable to progress an application for review, or do anything else. It is therefore appropriate to dismiss these proceedings. I pointed out in MedAid No 1 that dismissal under s 42A(5) of the AAT Act is not a good fit in circumstances like these. It may be possible to dismiss pursuant to s 42A(2), but the better course is to rely on s 42B given there is no reasonable prospect of success in circumstances where the applicant is no longer able to progress the application to finality.

5. Mr Murray noted that in MedAid No 1 I agreed to allow a former director, creditor and member of the entity time to make his own application to be joined to the extant proceedings before the dismissal took effect. The applicant in that case had argued he was a person whose interests were affected by the decision under review within the meaning of s 30(1A) of the AAT Act. I recollect taking that approach because the parties were not prepared on that occasion to argue an application for joinder. When the joinder application was made, I had the opportunity to hear from the parties and consider the particular statutory context, noting the joinder provision in s 30(1A) of the AAT Act is amended (somewhat confusingly) by s 14ZZD of the Taxation Administration Act 1953 (Cth) (the TAA).

6. I decided in MedAid Pty Ltd and Commissioner of Taxation [2018] AATA 170 (MedAid No 2) that it was not possible for the individual to become a party in circumstances where the applicant no longer existed. If the applicant had ceased to exist, it could not consent to the joinder – and I concluded consent was required under a proper reading of the statute. I went on to explain the discretion would not be exercised in the individual’s favour in any event.

7. That brings me back to the present proceedings. The now defunct applicant taxpayer was the only entity with the right to object to the assessment while it remained registered. Section 14ZZ of the TAA makes clear such an entity also has the right to commence review proceedings. Third parties do not enjoy the same rights to initiate review proceedings in taxation matters, whatever rights they might have in other reviews in the Tribunal. Perhaps in recognition of this reality, Mr Murray argued for his client, the former director, to be given an opportunity to consider applying for a joinder before the proceedings were dismissed. That argument proceeds on the basis the director is unable to commence review proceedings but may still have the ability to join proceedings which are already on foot.

8. I was not prepared to reject that argument out of hand in MedAid No1 because the parties were not ready to discuss the joinder provisions on that occasion. I subsequently concluded in MedAid No 2 that joinder was not possible or appropriate in relevantly similar circumstances. With the benefit of that insight, I am not inclined to delay the finalisation of these proceedings. The director has already had an opportunity to make a joinder application, and he has not yet chosen to do so even though he was obviously aware the applicant has been deregistered.

9. I am satisfied the proceedings should be dismissed forthwith pursuant to s 42B of the AAT Act for reasons I have already given.

I certify that the preceding 9 (nine) paragraphs are a true copy of the reasons for the decision herein of Deputy President Bernard J McCabe

.............................[SGD]...........................................

Associate

Dated: 5 October 2023

Date(s) of hearing:	3 October 2023
Solicitors for the Applicant:	Irish Bentley Lawyers
Solicitors for the Respondent:	Australian Government Solicitor